STOCK OPTION/NON-COMPETE AGREEMENT

STOCK OPTION/NON-COMPETE AGREEMENT
THIS STOCK OPTION/NON-COMPETE AGREEMENT ("the Agreement") is made effective as
of January 10, 1994, by and between Stephen G. Morrison ("Morrison") and
Policy Management Systems Corporation ("PMSC").
W I T N E S S E T H:
WHEREAS, Morrison has been employed by PMSC in a position of significant
responsibility and PMSC desires to recognize Morrison's contribution to PMSC
by making Morrison a "Key Employee" as defined in the Policy Management
Systems Corporation 1989 Stock Option Plan ("Plan") and therefor eligible to
be granted Options as defined therein; and
WHEREAS, Morrison has developed and will continue to develop intimate
knowledge of PMSC's business practices, which, if exploited by Morrison in
contravention of this Agreement, could seriously, adversely and irreparably
affect the business of PMSC; and
WHEREAS, Morrison and PMSC each desire to induce the other to enter into this
Agreement; and
WHEREAS, PMSC would not make Morrison a Key Employee in the event that
Morrison refused to agree to the terms and conditions of this Agreement and
thus Morrison would not be eligible to receive Options under the Plan;
NOW, THEREFORE, in consideration of the premises and the mutual promises and
covenants of the parties hereto, Morrison and PMSC agree as follows:
1. Grant. Effective January 10, 1994, PMSC grants Morrison "non-qualified"
Options to purchase up to 25,000 shares of PMSC common stock pursuant to
the Plan. Non-qualified options are subject to tax upon exercise as set
forth in paragraph 5 below.
2. Price and Expiration. The option price of the share subject to these
Options is the closing price of the stock on the New York Stock Exchange
on the date of grant, i.e., January 10, 1994. These Options must be
exercised within ten (10) years of the effective date of this Agreement or
they expire.
3. Availability for Exercise. 33 1/3% of the shares subject to the Options
granted will become available for exercise at the end of each of the three
(3) years following the effective date of this Agreement. For example ...
33 1/3% of the total number of Options granted will be available for
exercise beginning January 10, 1995; 66 2/3% will be available for
exercise beginning January 10, 1996; and 100% will be available for
exercise beginning January 10, 1997. Once Options become available for
exercise, they will remain available for exercise unless they expire.
4. Order of Exercise. The Options may be exercised without regard to the
order in which these and any other Options were granted and without regard
to any unexpired and unexercised qualified, Incentive Stock Options
("ISO's") or other non-qualified options.
5. Tax Liability. The tax liability which Morrison may incur relating to
these Options is described below based upon present law and regulations
which are subject to change. Taxes incurred are:
* when options are granted - none
* when options are exercised - the difference between the fair market
value of the stock at the date of exercise of an Option and the
option price is a capital gain but generally will be treated as
ordinary income during the year the Option is exercised. Such tax
liability is created at the time Morrison exercises an Option and
PMSC is required to collect withholding taxes from Morrison.
Federal income taxes (computed at a rate of 20% of the above
described difference) and FICA and state income taxes (computed at
the applicable rate of the above described difference) are withheld.
For example...if the option price is $69.38 and the fair market
value at the date of the exercise is $74.38, the difference is
$5.00, and assuming an applicable FICA rate of 7.65% and state
income tax rate of 7%, along with the 20% federal income tax, the
Company would collect a tax of $1.73 per share from Morrison
* when shares are sold - the difference between the fair market value
at the date of exercise (the $74.38 in the above example) and the
price at which Morrison sells the stock is treated the same as above
described during the year in which Morrison sells stock purchased by
exercise of his or her options.
6. Exercise and Payment. Exercises of Options shall only be handled pursuant
to the Instructions set forth on the last page of this agreement. To
exercise these Options, Morrison shall make payment in full to PMSC for
the option price of the shares to be purchased...plus the combined
(federal, FICA and state) tax liability Morrison incurs. Such taxes paid
to PMSC will be forwarded to the Internal Revenue Service and appropriate
state tax commission and credited to Morrison in the same manner as the
withholding tax on Morrison's salary. Morrison's actual tax will depend
upon the overall tax rate calculated when Morrison prepared his tax
returns. Morrison should consult a tax professional regarding questions
about Morrison's actual tax liability.
7. Non-competition. In consideration of the Options hereby granted, Morrison
covenants and agrees that Morrison shall devote his best efforts to
furthering the best interests of PMSC and that for the one (1) year period
from the effective date hereof, and if Morrison separates from employment
with PMSC for any reason within said one (1) year period, then for one (1)
year period from the date of such separation from employment, Morrison
shall not "Compete" with PMSC. The region within which Morrison agrees
not to Compete with PMSC is the United States, Canada and those countries
in which PMSC has customers or clients as of the date of Morrison's
separation from employment. For the purpose of this Agreement, the term
"Compete" shall have its commonly understood meaning which shall include,
but not be limited by, the following items with respect to PMSC"s
insurance application software licensing, data processing, consulting and
information services businesses and any other businesses carried on by
PMSC at the time of Morrison's separation from employment:
(i) soliciting or accepting as a client or customer any
individual, partnership, corporation, trust or
association that was a client, customer or actively
sought after prospective client or customer of PMSC
during the twelve (12) calendar month period immediately
preceding the date of Morrison's separation from
employment;
(ii) acting as an employee, independent contractor, agent,
representative, consultant, officer, director, or
otherwise affiliated party of any entity or enterprise
which is competing with PMSC in offering similar
application software or services to parties described in
(i) above; or
(iii) participating in any such competing entity or enterprise
as an owner, partner, limited partner, joint venturer,
creditor or stockholder (except as an equity holder
holding less than a one percent (1%) interest).
Notwithstanding any other provision of this Agreement, nothing in this provision
or Agreement shall prohibit Morrison from returning to the practice of law at
any time or any place.
8. Non-Hiring. During Morrison's employment with PMSC and for a period of
three (3) years after separation from such employment, Morrison agrees
that Morrison shall under no circumstances hire, attempt to hire or assist
or be involved in the hiring of any employee of PMSC, with the exception
of Carol Collier-Plexico, either on Morrison's behalf or on behalf of any
other person, entity or enterprise unless otherwise agreed to in writing.
Also, for a similar period of time, Morrison agrees to not communicate to
any such person, entity or enterprise the names, addresses or any other
information concerning any employee of PMSC or any past, present or
prospective client or customer of PMSC unless otherwise agreed to in
writing.
9. Equitable Relief. Morrison acknowledges (i) that Morrison's skill,
knowledge, ability and expertise in the business described herein is of a
special unique, unusual, extraordinary, and/or intellectual character
which gives said skill, etc. a peculiar value; (ii) that PMSC could not
reasonably or adequately be compensated in damages in an action at law for
breach of this Agreement; and (iii) that a breach of any of the provisions
contained in this Agreement could be extremely detrimental to PMSC and
could cause PMSC irreparable injury and damage. Therefore, Morrison
agrees that PMSC shall be entitled, in addition to any other remedies it
may have under this Agreement or otherwise, to preliminary and permanent
injunctive and other equitable relief to prevent or curtail any breach of
this agreement; provided, however, that no specification in this agreement
of a specific legal or equitable remedy shall be construed as a waiver of
or prohibition against the pursuing of other legal or equitable remedies
in the event of such a breach. Notwithstanding any other provision of
this Agreement, nothing in this provision or this Agreement shall prohibit
Morrison from the practice of law at any time or any place.
10. Breach of Agreement. Morrison agrees that in the event Morrison breaches
any provision of this Agreement, PMSC shall be entitled, in addition to
any other remedies it may have under this Agreement, to offset, to the
extent of any liability, loss, damage or injury from such breach, any
payments due to Morrison pursuant to his employment with PMSC.
11. Employment Understanding. This Agreement and the Employment Agreement
between Morrison and PMSC constitute the entire agreement between the
parties with regard to the subject matter hereof, and there are no
agreements, understandings, restrictions, warranties or representations
between the parties relating to said subject matter other than those set
forth or provided for herein or in any Agreement Not To Divulge or
employment agreement between PMSC and Morrison.
12. General. In the event that any provision of this Agreement or any word,
phrase, clause, sentence or other portion thereof (including, without
limitation, the geographical and temporal restrictions contained herein)
should be held to be unenforceable or invalid for any reason, such
provision or portion thereof shall be modified or deleted in such a manner
so as to make this Agreement enforceable to the fullest extent permitted
under applicable laws. All references to PMSC shall include its
subsidiaries as applicable. This Agreement shall inure to the benefit of
and be enforceable by PMSC and its successors and assigns. No provision
of this Agreement may be changed, modified, waived or terminated, except
by an instrument in writing signed by the party against whom the
enforcement of such is sought. No waiver of any provision or provisions
of this Agreement shall be deemed or shall constitute a waiver of any
other provision, whether or not similar, nor shall any waiver constitute
a continuing waiver. Headings in this Agreement are inserted solely as a
matter of convenience and reference and are not a part of this agreement
in any substantive sense. This Agreement may be executed in two
counterparts, each of which will take effect as an original and shall
evidence one and the same Agreement.
13. Notwithstanding any other provision of this herein, nothing in this
Agreement shall prohibit Morrison from returning to the practice of law at
any time or any place.
14. Plan Controls. In the event of any discrepancy between this Agreement and
the Plan as to the terms and conditions of the Options, the Plan shall
control.
15. Governing Law. The terms of this Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date first above written.
POLICY MANAGEMENT SYSTEMS CORPORATION
"PMSC"
By: G. Larry Wilson
G. Larry Wilson
TITLE: President
"MORRISON"
Stephen G. Morrison
Stephen G. Morrison
Effective Date: January 10, 1994
Date Signed: February 3, 1994
INSTRUCTIONS FOR EXERCISE OF PMSC STOCK OPTIONS
Contact Person: Lynn W. Dillard, Ext. 4303
2B1
Post Office Box Ten, Columbia, SC 29202
An exercise form must be obtained and properly filled out. The form and
employee's check for the appropriate exercise price and withholding taxes
(federal and state income taxes and FICA) must be delivered to the Contact
Person. The Company does not deal with third parties concerning employee's
exercise of his or her stock options. If an employee deals with a brokerage
firm, a bank or any other third party, the employee shall be responsible to keep
such party from impacting on the two-party transaction between the Company and
the employee. This transaction solely consists of employee bringing Company the
exercise form and his or her own check and after several days the Company giving
employee a certificate for his or her shares of stock. The Company's stock
transfer agent is located in New York. If desired, an employee may request and
pay the charges for the certificate to be sent to the Company via Federal
Express. The certificate will only be issued in the employee's name. Employees
may only exercise a whole number of options as PMSC shall not direct the
transfer agent to issue fractional shares.
As an optionholder, an employee is entitled to request copies of the Company's
Annual and Quarterly Reports. An employee will not receive such reports
automatically as an optionholder. Additionally, reports are available upon
request showing a complete list of employee's options outstanding, options
available for exercise, cost per share, total costs, and expiration dates of
options. An employee may wish to request these materials or information before
exercising options by calling or writing the Contact Person.
THESE INSTRUCTIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE.